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June 17, 2005

Economics and Environmentalism - Are they in conflict?

Posted by William Coleman

It is often claimed that mainstream economics and environmentalism are in conflict. Some environmentalists go so far as to claim that they "hate mainstream economics". However economist Dr William Coleman - the author of Economics and its Enemies: Two Centuries of Anti-Economics - argues that only certain forms of environmental thought are incompatible with mainstream economics.

The Western Swamp Tortoise is a harmless and inglorious creature. No larger than a child's palm, it is confined to two swamps in the vicinity of Perth, Western Australia. During the wet winter the tortoises wade about the mire. When the swamps evaporate in Perth's fierce summer, the tortoises go into a kind of summer hibernation under piles of leaves. The great danger to their lives at this point is death from drying out.

Western Swamp Tortoises are not very engaging animals. They are not large, or fast, or beautiful. They exhibit no appealing family life; their eggs are laid in the swamp bank, and left to their fate. Indeed, they have no social existence at all; "individuals mixing freely whilst not really interacting".

Tellingly, although the Tortoise was first discovered by British settlers in 1839, nobody seems to have noticed their existence again until 1953, when a schoolboy found one waddling across a road. He took it to a pet show, where the eyes of a curious naturalist fell upon it. A search for its kin was organised, and, after much effort, two more tortoises were found, and deposited in Perth Zoo.

And this pair was prized. For the Tortoise is a "critically endangered" animal, the rarest reptile in Australia, and only 25 adults are believed to exist in the wild. Over a period of 40 years the Zoo has led an anxious and difficult effort to induce these animals to reproduce. In the 1990s 1.6m Australian dollars (A$) was spent, and 170 tortoises successfully raised. The Zoo probably has saved a species from extinction. It may have saved a species that "Mother Natural Selection" had doomed to extinction, even in the absence of man.

When invited to defend the cost of the programme, Zoo staff have referred to the great expense of even a small amount of road works. A kilometre of freeway can cost A$12m. Indeed, there are some freeways that cost - unbelievably - A$60m a kilometre. To save a species is certainly a better way of spending A$1.6m than obtaining another 26 metres of free way.

This defence is vigorous, but not conclusive. Both the tortoise and the freeway may be a waste of money. There may be ways of spending that are far more valuable.

As it happens, at about the time the Zoo was publicising its success with the Tortoise, the Royal Children's Hospital in Melbourne was refused a A$1.57 million grant from public monies for a modern CT Scanner. The device was invented by the Nobel Laureate, the late Sir Godfrey Hounsfield, and has been described as "the greatest transformation in non-invasive medical diagnosis since Wilhelm Röntgen discovered x-ray". CT Scanners have proved invaluable in planning radiotherapy, as well as the treatment of spinal injuries and brain damage.

The spectacle of A$1.6m being allocated to a swamp tortoise rather than to ill children may well provoke the thought that social choice is being incompetently executed in our society.

Yet the sense of easy judgement (of most people) over these alternative uses of A$1.6m disguises the problem. If the tortoise is not worth A$1.6m to save, is it also not worth A$160 to save? Is it really worth … nothing? Is a part of Nature without value just because it is not cute, or awesome, or palatable, or handbagable?

Here we tread on a terrain where a clash takes place between economists and environmentalists. We touch on the reason why many environmentalists, in the frank words of one green advocate, "hate mainstream economists".

Fully armed, the environmentalist has three projectiles to hurl at the economist.

1. Environmental Apocalypticism. This maintains that Nature is vulnerable to fatal damage by man's civilisation, with dreadful consequences for man's civilisation.

2. Environmental Naturalism. This precept holds that man should live more "naturally". Nature should be the touchstone of all decisions, and honoured by the way we live. As D.H. Lawrence once urged, we should "Be a good animal". Like animals we should do without technology, markets, impersonal relations and rationality.

3. Biocentrism. This is the doctrine that Nature has an objective and intrinsic value, independent of any services it may provide mankind. If you like, trees have rights. So do rocks.

But of these three projectiles, only the third – biocentrism – actually constitutes a conflict in principle with "mainstream economics".

Environmental Apocalypticism considered as a principle is not in conflict with mainstream economics. That economic growth may damage Nature (and in turn the economy) is entirely consistent with core economic principles. Thus, economics is not in principle in conflict with environmentalists over the problem of Global Warming. To economists Global Warming may be a problem that requires market regulation. And if it was it would be simply an illustration on a massive scale of the familiar text book case of market failure through "externalities". Granted, as a point of fact, economists may consider fears about the consequences of warming exaggerated and the Kyoto protocol as doing more harm that good – but that is as a point of fact. And many facts are passing things.

The doctrine of Environmental Naturalism is not unambiguously in conflict with economics. As an ethical injunction economics does not affirm it, but it both accommodates and dismisses it. Any wish for oneself to live "more naturally" is accommodated as one's "preference". It is any wish for one's neighbour to live more naturally that is disregarded as a merely "meddlesome preference".

It is on the claim that Nature has an intrinsic value (Biocentrism) that environmentalists and economists clash in principle. Economics has tended to judge any social system by the degree to which it supplies human satisfactions. In adhering to Biocentrism, the environmental anti-economist declares that the state of human satisfaction to be a radically insufficient criterion of judgement of any social philosophy. According to biocentrists, reverence for the good must often debar the service of human comfort and ease. According to biocentrists, economics, by falsely identifying the defence of the good with a search for human comfort and ease, has facilitated various offences against moral values. Above all, by recognising no thing to be good or valuable unless it provides comfort and ease to humanity, economics has approved of the degradation of the natural environment.

What responses to Biocentrism are available to the economist? There seem to be three, and we may call them, "atheism", "agnosticism" and "toleration".

1. "Atheism". This simply denies the existence of the intrinsic value of Nature. Such a denial was advanced by the illustrious neoclassical economist Leon Walras (1834-1910) [Walras, L'économie politique et la justice, 1860, p.xi, emphasis in original]:

Any being that is not human is a thing. The thing is an impersonal being, that is to say a being that doesn't know, that does not possess, that is not at all responsible for its conduct, nor susceptible to merit and demerit. By this reason things are at the discretion of persons. For all time it is a right and a duty for the former to contribute to latter regarding their end, the accomplishment of their destiny. It is why we burn the wood of the forest, why we eat the fruits and animals of the land, why we turn rivers from their course. And if it was useful and possible to pierce the earth right through, to drain the seas, to draw closer the earth and the sun, it would be permitted other than commanded, for this only[,] it is for all time a right and a duty for us to subordinate the end of things to our will, their blind destiny to our moral destiny. Thus on one side the impersonal nature; on the other side humanity. Reason submits the first to the second.

Walras' thesis is that any thing incapable of moral responsibility – such as a rock, a tree, or a tortoise - has no rights. At first glance this appears to have some correspondence with our practise: as moral responsibility diminishes (say in children or the insane), rights are attenuated. Yet the critical fact is that we do not deem as strictly extinguished the rights of children who are incapable of moral responsibility. On reflection, Walras' doctrine seems no more than a pirouette of extravagant rationalism: the only thing a Rational Will need have any respect for is another Rational Will. Only reason has rights.

2. "Agnosticism": The doctrine of Agnosticism does not deny the existence of intrinsic values. It denies the existence of any significant knowledge of intrinsic values.

The agnostic position dismisses human claims to knowledge of intrinsic values as illusions; they are not reflections of intrinsic value, but of human relishes. Thus animals beautiful to the human eye are (illegitimately) awarded an intrinsic value; animals which are rare (and so have a subjective scarcity value) are also awarded a spurious intrinsic value. Agnosticism pursues the suspicion that human satisfactions are latent in the supposed recognition of intrinsic values. To agnosticism every putative recognition of intrinsic value betrays signs of a human longing. Thus the appeal of wilderness is an appeal to a frontiersman fantasy. You used to shoot buffaloes. Now you dance with wolves.

This agnostic position, without denying the existence of intrinsic values, brandishes the seeming paradox of a group of human beings (environmentalists) deciding what is the value of things independent of what human beings think of them. Without denying the existence of intrinsic values, the agnostic position contends that our ignorance of these values must, and should, leave our conduct unaffected by their existence.

Agnosticism puts us on guard against the temptation to elevate our pleasures into the world's duties. But its thesis that it is impossible to recognise extant intrinsic values at all, even roughly, seems pessimistic.

3. Toleration. It is my argument that economics, however, is neither Agnostic or Atheist about an intrinsic value of Nature.

"Toleration" is the best description of the position of economics on Biocentrism. Economic doctrine does not affirm an intrinsic value of Nature, yet economics supports social mechanisms that allows persons to affirm in action that Nature has an intrinsic value. The major social mechanism is, of course, market patronage. If persons do affirm intrinsic values, then the market will surely accommodate them. Thus "ethical" investment funds.

But it deserves stressing that the social mechanisms favoured by economists, that articulate the affirmation of intrinsic values, extend well beyond "the market". They include also the provision of "public goods" by the state. Public goods, as the text books tell us, are those goods whose benefit is non-excludable and non-rival, such as the light of a light house. Any common sentiment among the public that the sheer existence of a species, or habitat, is valuable will fall into the category of public good, as the benefit derived from that preservation of its very existence is both non-excludable (a species cannot exist for John but not for Fred) and it is non-rival (for it to exist for John is not to make it exist any the less for Fred). Thus the provision by law of national parks and protection of species are interpretable as the provision of a public good, and therefore is consistent with economics.

The Biocentrist will, nevertheless, be dissatisfied with Toleration. They will protest that there is no reason to suppose that such accommodation of the affirmation of intrinsic values by the market and public goods will lead to a rightful amount of affirmation. And they are right. There is nothing in economic doctrine that is inconsistent with the contention that a "welfare efficient" system of markets and public goods is unduly insensible to the intrinsic value of Nature.

But economics "will only tolerate Toleration". Economics denies that the rights of Nature should be enforced over the common opinions and wishes of humankind. Democracy, in other words, trumps Nature. The critical insinuation of environmentalism is that Nature trumps Democracy. Thus environmentalists object to the "democratic" character of economics. One relatively open handed reproof of this democratic orientation is provided by Clive Hamilton in his environmentalist anti-text, the Mystic Economist:

Consumer sovereignty is the foundation stone of the Western political system and that is why economists, the ideologists of that system, defend consumer sovereignty so vociferously.
Here we see economists being identified with democracy ("the Western political system") and being cold-bloodedly faulted for the identification. Here we see the true location of the conflict between economist and environmentalists who "hate mainstream economics". It is not over the intrinsic value of Nature, it is over the desirability of Democracy.

Dr William Coleman is Senior Lecturer in Economics at the Australian National University and the author of Economics and its Enemies: Two Centuries of Anti-Economics, (Palgrave Macmillan, 2002).

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Isn't Dr Coleman attacking a straw man?

Yes, there are environmentalists who believe that agricultural, let alone industrial socieities represent a clear and present danger to Planet Earth.

And there are economists for whom concepts like "externalities" and "market failure" - let alone Arrow's paradox or the evidence of consumer irrationality - are too painful to contemplate.

Both extremes share one thing: they don't want to believe that (oh the fun of quoting you-know-who here) politics is determinant in the last instance. It is of course of no more or no less interest than any other psychological report.

Posted by: Innocent Abroad at June 17, 2005 04:35 PM

Comment to Innocent Abroad - I don't know who you are quoting - certainly not Voldemort. Please tell us.

One other point - was it really "frontiersmen" who killed the buffalo? I thought the species was deliberately wiped out as a method of subduing the Plains Indians.

Posted by: Robert H. Olley at June 18, 2005 04:42 PM

I thought Marx said it, but a bit of quick Googling doesn't find it... perhaps he didn't.

Posted by: Innocent Abroad at June 19, 2005 06:32 PM
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